The definition of a relevant investment was introduced in the Finance Act 2007 along with the new annual limit amount for EIS and VCT investments but excluded certain investments. Finance Act 2012 amended the definition to include ‘other risk finance investments’ but again excluded certain investments.
Finance Act (2) 2015 introduced new EIS and VCT rules to better target the schemes to support high-growth companies which then saw the introduction of a new lifetime investment limit. The lifetime investment limit was dependent on the definition of a relevant investment but these changes did not consider the provisions included in the Finance Act 2007 and Finance Act 2012. As a consequence, certain investments made before 2012 did not count towards the lifetime funding limit.
Legislation will be introduced in the Finance Bill 2017-18 which amends the definition of relevant investments to ensure all investments, including risk finance investments made before 2012, are counted towards the lifetime funding limit for companies receiving investment under tax advantaged venture capital schemes.
The funding limit is £12 million for most companies and £20 million for knowledge-intensive companies.
These changes will apply to qualifying investments made on or after 1 December 2017.
This measure will affect companies, social enterprises, fund managers and individuals using the EIS, VCT AND SITR.